Assuming an decrease in money demand, then to keep interest rates constant the Fed must
a. keep the money supply constant.
b. conduct an open market sale of bonds.
c. reduce the required ratio.
d. both b and c.
e. None of the above
Question 2
If the short-run aggregate supply curve is shifting down repeatedly, it is rather likely that ________.
A) output is declining repeatedly, relative to potential output
B) the long-run aggregate supply curve is shifting to the left
C) negative price shocks are recurring
D) all of the above
E) none of the above
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